Partnership is a business venture where two or more individuals mutually agree to share profits or losses in a specified ratio. Partnership has an advantage over sole proprietorship in terms of the sharing roles responsibilities and balanced decisions to run a fairly a large business.
Partnership may be limited or unlimited.
In case of the former situation, partners have to bear the risk to the extent of their capital share even if the business suffers a greater loss. But in latter case no matter how much the loss it has to be borne by the partners as per the stated ratio in their partnership deed.
Given below are some instructions:
Step1- Get the necessary federal, state level or local permits or licenses before you file for a partnership firm.
Step2 – File the necessary papers to register for name certificate of your partnership firm. Determine if you have to file the application along with other documents at the federal, local or state office – depending where the business is carried out.
Step3- Fill in the respective application form and submit them along with the necessary documents in order to obtain unique ID number from IRS as well as the State Revenue Dept.
Step5-Draft an agreement seeking consensus of all the partners on issues like the rights, duties, responsibilities, decision making, planning and management. This reduces hassles lest dispute should arise in future. As a prudential entrepreneur, it would be in the best interest to consult a competent lawyer while preparing such a document.
Step6 – Once the partnership deed is finalized, take the signatures of the partners and make number of copies. Give one copy to each partner for their personal record.
Step7 – Till the first year, you or your partners would not be fully aware of tax laws and other financial statements. Hiring a competent accountant who can assist you in these matters could be used till you have acquired the tricks of the trade.